Top-Performing Canadian Cannabis Stocks in 2018

The Canadian cannabis stocks on our list have been top marijuana sector performers year to date

SmallCapPower | December 27, 2018: 2018 marks a historic year for the cannabis industry, with Canada becoming the first G7 nation to federally legalize marijuana for recreational use. The year began strong for cannabis stocks, following a strong rally that began in the fall of 2017. However, a stock market correction saw significant declines in cannabis stocks, along with other major indices in mid-January. Cannabis stocks saw another rally following the passage of Bill C-45 in June 2018, but a major catalyst was Constellation’s (NYSE:STZ) $5B investment in Canopy Growth Corporation (TSX:WEED) in August. This rally lasted right up until legalization on October 17, when a selloff began due to concerns of overvaluations and supply shortages. Since October, the cannabis industry has entered bear market territory with significant pullbacks influenced by macro trends and from association with Aphria Inc.’s (TSX:APHA) short-seller report in December. Today, we’ve identified three Canadian cannabis stocks that have generated top returns for shareholders in 2018 despite a volatile Q4/2018.

TerrAscend is a company that serves the medical cannabis market through its subsidiaries. These include Solace Health, a licensed producer of medical cannabis, TerraHealth Network, a clinical support and educational platform, and SolaceRx, delivering innovative and specialized pharmaceutical products for healthcare professionals with the goal of addressing unmet medical needs. In August, the Company announced that Solace Heath had entered into an agreement with the Nova Scotia Liquor Corporation to supply the province of Nova Scotia with cannabis products for use in the recreational market. More recently, the Company secured a multi-year supply agreement with PharmHouse Inc. Under the terms of the agreement, PharmHouse’s 1.3 million sq. ft. greenhouse in Leamington, ON will supply TerrAscend with cannabis flower.

Canopy Growth Corporation is one of the largest cannabis companies listed by market cap on the TSX and NYSE. To position itself in Canada’s recreational market, the Company has secured agreements with the Provinces of Quebec, Prince Edward Island, New Brunswick, and Newfoundland & Labrador to supply the adult consumer market with high-quality cannabis. The Company has the largest licensed production platform in Canada, with over 600,000 sq. ft. of production space. To further solidify their leading position in the market, Canopy Growth expects to have up to an additional 5 million sq. ft. of production during the next 12 months. The Company has also acquired the necessary agreements to export medicinal cannabis to Australia, Brazil and Germany. On November 29, 2018, Canopy Growth announced it had entered into a strategic supply agreement under which MediPharm Labs Inc. (TSXV:LABS) will supply up to 900kg of cannabis extract to Canopy over the next 18 months.

Neptune Wellness Solutions is a health and wellness products company that operates to extract, purify, and formulate science-based nutritional products. Its custom formulations are available in multiple forms such as soft gels, liquid solutions, nutritional emulsions and chewables. In Sherbrooke, Quebec, the Company is focusing on the extraction and purification of cannabis oil for sale in the recreational cannabis market. On December 21, 2018, the Company announced a multi-year, IP licensing partnership with Lonza (SWX:LONN) to gain access to the Lonza’s Licaps® liquid-filled, hard capsule technology. With an initial annual capacity of 200 million capsules, the agreement will allow Neptune to integrate its cannabis oil formulation with the technology to become a leading cannabis provider in the Canadian market.

Market Cap: $292.4 Million

1 Month Returns: -12.2%

YTD Returns: +22.8%

Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.

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